2023 results are in line with our expectations

The company announced its 2023 results: net profit to mother - 801 million yuan, mainly due to multiple innovative drug assets advancing the post-clinical stage. Expenses are high, and the company's 23-year performance is in line with our expectations.

Development trends

Celizumab is about to be approved, and preparations for commercialization are underway. In February '24, the results of a phase III clinical study on treating moderate to severe plaque psoriasis in adults were officially published in an authoritative international dermatology journal; the new drug marketing applications for moderate to severe plaque psoriasis and axial spondyloarthritis (AS) indications were accepted by CDE in March 2023 and January 2024 respectively. We expect Celizumab to be approved as an indication for psoriasis within the year and is expected to be approved as an AS indication in 2025. Currently, the company is actively forming a commercialization team to prepare the product for launch. We believe that the domestic psoriasis market is in a period of increase in the penetration rate of biologics, and that products related to IL17A targets have an important therapeutic position in the domestic psoriasis market. It is recommended to actively pay attention to the company's subsequent commercial preparations and post-marketing volume trends.

Clinical phase III of GR1802 is ongoing, and passive immunomumab is expected to be submitted for marketing within this year. IL4Rα monoclonal antibody GR1802 started clinical phase III clinical trials for moderate to severe atopic dermatitis (AD) in China at the end of 23. In addition, GR1802 is also undergoing phase II clinical trials for various products such as chronic sinusitis with nasal polyps, chronic spontaneous urticaria, asthma, and allergic rhinitis. The passive immune dual antibody GR1801 for rabies is currently in phase III clinical phase. The company expects to complete phase III clinical trials and submit product marketing applications within this year. The company expects tetanus passive immunomab GR2001 to be launched in phase III clinical trials within 2024 and is expected to be approved for marketing in 2026.

The financial situation is healthy, expenses are reasonable, and various early clinical products are progressing smoothly. The company spent 620 million yuan on R&D in '23, an increase of 36.5% over the previous year. It was mainly active clinical promotion of various products. By the end of '23, the company's cash and cash equivalents were RMB 2,889 million, which can strongly support the company's future investment. The company's BCMA/CD3 dual antibody GR1803 is in phase I clinical trials for multiple myeloma. In addition, the company also has a number of CD3 dual antibodies in the early clinical stages.

Profit forecasting and valuation

We have basically kept our revenue forecast unchanged for 2024. As Celizumab is about to be approved, the company is actively preparing for product commercialization. In addition, we expect high sales and R&D expenses in 24. We lowered our net profit forecast for 24 years from -773 million yuan to -1,079 million yuan; for the first time, we introduced 25-year revenue and net profit forecasts of 308 million yuan and -1,154 million yuan. Using the DCF valuation method to maintain an outperforming industry rating, we believe that revenue and net profit due to mother are not the main focus of the current market. As commercialization and clinical progress of the company's products are progressing in an orderly manner, the company's products have long-term value. We raised our target price by 15% to RMB 46, with 15.6% upside compared to the current stock price.

risks

New product launches, clinical trial data and sales fell short of expectations; competition intensified.